Does the Noodles & Company franchise agreement require disclosure of any interest in a Competitive Business?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of the Franchise Agreement, you and your Owners shall not, without Noodles & Company's prior written consent, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person, persons, partnership, limited liability company, or corporation:
(c) Own, maintain, advise, be employed by, consult for, make loans to, operate, engage in or have an ownership interest (including any right to share in revenues or profits) in any Competitive Business which is, or is intended to be located within:
(1) the Protected Area;
(2) a radius of 15 miles from your Noodles & Company Restaurant;
(3) a radius of 15 miles of any Noodles & Company Restaurant; or
(4) the United States.
"Competitive Business" means any business that operates or franchises one or more restaurants: (1) whose sales of Specified Dishes (as defined below) collectively constitute more than 10% of restaurant operating revenues; (2) that are the same as, or substantially similar to, the Noodles & Company concept as it evolves or changes over time; or (3) that operate in a fast casual or quick casual format. As used in this Agreement, "Specified Dishes" means noodle dishes, pasta dishes, Asian dishes, Italian or Mediterranean dishes and any other dishes that are the same or substantially similar to the dishes on the Noodles & Company menu ("Noodles & Company Dishes") as it may evolve or change over time. Restrictions in this Agreement on competitive activities do not apply to: (a) the ownership or operation of other Noodles & Company restaurants we or our Affiliates licenses; (b) the ownership of shares of a class of securities that are listed on a public stock exchange or traded on the over-the-counter market and that represent less than 5% of that class of securities; or (c) any restaurant concept whose per person average check during the preceding 12 months was more than 50% higher or lower than Noodles & Company per person average check for the same period.
- (j) you and your Owners must execute a noncompetition covenant, in form and substances satisfactory to us, in favor of us and the transferee agreeing that, for a period of two years, starting on the effective date of the transfer, you and your Owners will not, directly or indirectly (such as through a member of his or their Immediate Families), own any legal or beneficial interest in, or render services or give advice to: (1) any Competitive Business; or (2) any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business in any Designated Market Area (as defined by Nielsen Media Research) where a Noodles & Company Restaurant is located, whether Company-owned or franchised, or within any area that is or was within an Area Development Area or a Protected Area, as those terms are defined in the Area Development Agreement and Franchise Agreement;
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, franchisees and their owners must disclose any ownership interest in a Competitive Business. During the term of the Franchise Agreement, franchisees and their owners cannot, without prior written consent from Noodles & Company, directly or indirectly own, maintain, advise, be employed by, consult for, make loans to, operate, engage in, or have an ownership interest in any Competitive Business. This restriction applies to businesses located within the Protected Area, within a 15-mile radius of the franchisee's Noodles & Company Restaurant, within a 15-mile radius of any Noodles & Company Restaurant, or anywhere in the United States.
A Competitive Business is defined as any business that operates or franchises one or more restaurants where the sales of Specified Dishes constitute more than 10% of restaurant operating revenues, that are the same as or substantially similar to the Noodles & Company concept, or that operate in a fast casual or quick casual format. Specified Dishes include noodle dishes, pasta dishes, Asian dishes, Italian or Mediterranean dishes, and any other dishes that are the same or substantially similar to the dishes on the Noodles & Company menu.
There are some exceptions to these restrictions. The restrictions on competitive activities do not apply to the ownership or operation of other Noodles & Company restaurants licensed by Noodles & Company or its affiliates. They also do not apply to the ownership of shares of a class of securities that are listed on a public stock exchange or traded on the over-the-counter market, representing less than 5% of that class of securities. Additionally, a restaurant concept is not considered a Competitive Business if its per-person average check during the preceding 12 months was more than 50% higher or lower than Noodles & Company's per-person average check for the same period.
Furthermore, if a franchisee transfers their interest in the franchise, both the franchisee and their owners must execute a non-competition covenant in favor of Noodles & Company and the transferee. This covenant prevents them from owning any legal or beneficial interest in, or rendering services or giving advice to, any Competitive Business for a period of two years following the transfer. This restriction extends to any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business in any Designated Market Area where a Noodles & Company Restaurant is located.